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BBAW2103 Financial Accounting | Open University Malaysia
Part I
PURPOSE
The purpose of this assignment is to enhance learners' understanding of the qualitative characteristics of accounting information and enhance learners' skills to analyse business transactions and prepare journal entries, trial balances, and financial statements.
REQUIREMENT
Answer all the questions and show your detailed workings clearly and systematically.
ASSIGNMENT 1: (CLO1)
a. Discuss how relevance, reliability, comparability, and consistency qualitative characteristics help in decision-making processes for external users such as investors, creditors, and other stakeholders.
b. Encik Adrian commenced his tax firm ABC Services on 1 January 2023.
|
Date |
Transactions |
|
January 1 |
Adrian, the owner of ABC Services, contributed RM100,000 cash to his company |
|
5 |
ABC Services provides consulting services and bills the client RM8,000, which will be paid in 30 days |
|
15 |
ABC Services purchases office supplies on credit for RM500 |
|
21 |
ABC Services pays RM2,000 in cash for rent expenses for the month |
|
30 |
ABC Services accrues RM3,000 in salaries expenses at the end of the month |
|
31 |
ABC Services borrowed cash RM500,000 from OUMB Bank |
Analyse all the above transactions by determining which accounts are affected, whether they are increased or decreased and whether they need to be debited or credited. Refer example given.
Example: On 1 January, Ali purchased equipment by paying cash of RM20,000
|
Date |
Accounts Affected |
Increase/ (Decrease) |
Double entry rules (Debit / Credit) |
|
eg: 1 January |
Equipment Cash |
Increase Decrease |
Debit Credit |
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ASSIGNMENT 2: (CLO2)
a. Farhad started a business named Farhad Legal Solution (FLS) offers legal services on 1 December 2023. The following are transactions that occurred during December 2023:
- Farhad brought in RM50,000 cash into the business.
- Farhad bought a car for his use worth RM112,000 cash using the company’s money.
- FLS provided legal services to a client worth RM7,000 and received cash from the client.
- FLS purchased office supplies worth RM2,000 cash.
- FLS paid RM700 cash for advertising expenses for December 2023.
- FLS sent a bill totalling RM5,000 to a client for the legal service provided and is yet to receive payment.
- FLS received RM3,000 cash as an agreement to start work as a legal advisor for a company starting January 2024.
- FLS paid RM3,600 cash for employees’ salaries.
- FLS paid RM2,400 cash for the December office rental.
Based on the above information, you are required to prepare the journal entries to record all transactions.
b. Afif Enterprise has operated since 1 January 2020. The following are the accounts’ balances of Afif Enterprise as at 31 December 2023:
| Account | Balance (RM) |
| Cash | 18,500 |
| Accounts receivable | 15,200 |
| Prepaid insurance | 2,400 |
| Inventory at 31/12/2023 | 22,800 |
| Office supplies | 4,500 |
| Prepaid advertising | 3,400 |
| Furniture & fittings | 22,600 |
| Accumulated Depreciation – furniture & fittings | 10,400 |
| Unearned Sales revenue | 3,700 |
| Accounts payable | 17,500 |
| Long term loan | 12,000 |
| Capital - Afif | 24,000 |
| Sales revenue | 42,000 |
| Salaries expenses | 5,800 |
| Repair expenses | 13,200 |
| Utility expenses | 1,200 |
Below is the additional information that needs to be considered for adjustment:
- Furniture and fittings are depreciated at a rate of 10 per cent annually using the straight-line method.
- The balance of office supplies on hand at the end of the year is RM2,500.
- Rentals for the current year amounting to RM2,200 are not yet paid.
- Employees’ salary for December 2023 for RM3,300 has not yet been paid.
- Utility bill for December 2023 for RM350 has been received but has not yet been paid.
- Prepaid advertising includes RM300 for the January 2024 advertisement.
- Expired insurance for the year 2023 is RM1,200.
- Accrued interest on the long-term loan until 31 December 2023 is RM900.
Based on the above information, you are required to prepare:
a) Income Statement for the year ended 31 December 2023.
b) Balance Sheet as at 31 December 2023.
Part II
ONLINE CLASS PARTICIPATION (10%) (CLO1)
Discuss the following topic(s) in the forum and submit proof of your participation in the online discussions:
- Discuss how understanding basic accounting principles helps individuals in managing their finances effectively.
- Discuss how accounting knowledge benefits working professionals in making business decisions or managing budgets in their respective roles.
- Discuss how financial statements, such as balance sheets and income statements, can assist businesses and individuals in assessing their finances.
- Discuss how understanding accounting concepts like assets, liabilities, and equity aids individuals in making better investment decisions for their finances.
